CLA-2 CO:R:C:S 556591 RAH
District Director
U.S. Customs Service
U.S. Customhouse
1 East Bay Street
Savannah, Georgia 31401
RE: Request for Internal Advice 4/92; Applicability of partial
duty exemption to galvanized steel sheet under subheading
9802.00.60, HTSUS
Dear Sir:
This is in response to your request for internal advice
dated November 7, 1991, regarding an inquiry from Nissho Iwai
American Corporation (NIAC) on the applicability of subheading
9802.00.60, Harmonized Tariff Schedule of the United States
(HTSUS), to certain steel products.
FACTS:
NIAC is negotiating a contract with An Mau Steel, a mill in
Taiwan, whereby hot rolled coil will be purchased by An Mau Steel
from a U.S. company and shipped to Taiwan. An Mau Steel will
process the hot rolled coil into galvanized material and sell it
to NIAC. NIAC customers in the United States purchase the steel
and then further process it by roll-forming and/or blanking and
painting.
ISSUE:
Whether galvanizing, roll-forming and/or blanking and
painting of steel constitute further processing operations under
subheading 9802.00.60, HTSUS.
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LAW AND ANALYSIS:
HTSUS subheading 9802.00.60 provides a partial duty
exemption for:
[a]ny article of metal (as defined in U.S. note 3(d) of this
subchapter) manufactured in the United States or
subjected to a process of manufacture in the United
States, if exported for further processing, and if the
exported article as processed outside the United
States, or the article which results from the
processing outside the United States, is returned to
the United States for further processing.
This tariff provision imposes a dual "further processing"
requirement on eligible U.S. articles of metal, one foreign, and
when returned, one domestic. Metal articles satisfying these
statutory requirements may be classified under this tariff
provision with duty only on the value of such processing
performed outside the U.S., provided the documentary requirements
of section 10.9, Customs Regulations (19 CFR 10.9), are met.
In C.S.D, 84-49, 18 Cust. Bull. 957 (1983) we stated that:
[f]or purposes of item 806.30, TSUS [the predecessor
tariff provision to HTSUS subheading 9802.00.60], the
term 'further processing' has reference to processing
that changes the shape of the metal or imparts new and
different characteristics which become an integral part
of the metal itself and which did not exist in the
metal before processing; thus, further processing
includes machining, grinding, drilling, threading,
punching, forming, plating, and the like, but does not
include painting or the mere assembly of finished parts
by bolting, welding, etc.
The foreign part of the dual "further processing"
requirement is satisfied in Taiwan, where the steel undergoes a
galvanization process. Customs has long held that hot-dip
galvanizing or electro-galvanizing are operations which satisfy
the "further processing" requirement of subheading 9802.00.60,
HTSUS. Headquarters Ruling Letter (HRL) 086289 dated March 13,
1990, citing HRL 555001 dated December 16, 1988 and HRL 067675
dated February 12, 1982.
Additionally, the steel is returned to the United States for
further processing, which includes roll-forming and/or blanking
and painting. Although painting is not a further processing
operation as delineated in C.S.D. 84-94, supra, in this case it
is done in conjunction with operations which constitute further
processing. Rolling-forming steel clearly constitutes a
manufacturing process which is sufficient to satisfy the
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domestic processing requirement. C.S.D. 90-32(6); HRL 555001
dated December 16, 1988. Moreover, blanking (which is analogous
to cutting) constitutes "further processing." C.S.D. 98-27(10);
HRL 037347 dated July 14, 1975 (flattening and cutting to either
specific or standard warehouse lengths constitute "further
processing"). Accordingly, it is our opinion that the procedures
in question are sufficient "further processing" operations both
abroad and on return to the United States to entitle the imported
galvanized sheet to the partial duty exemption available under
subheading 9802.00.60, HTSUS, upon compliance with the
documentary requirements of 19 CFR 10.9.
It should be noted that there is no requirement under
subheading 9802.00.60, HTSUS, that the identity of the person who
performs the "further processing" in the United States be known
at the time the material is exported from the United States, or
at the time the returned material enters the United States.
There is also no requirement that the same person who exported
the material, or the same person who imports the material must
perform the "further processing" in the United States. However,
the importer should satisfy the district or area director of the
actual performance of "further processing" in the United States.
See, 19 CFR 10.9, and HRL 556080 dated August 27, 1991.
In addition, the domestic "further processing" should be
conducted within a reasonable time following importation. See,
19 CFR 10.9, and HRL 556080, supra. In HRL 554965 dated
September 6, 1989, Customs found that under the circumstances of
that case, four months was a reasonable period of time to
warehouse stainless steel sheets in the United States before
being further processed.
HOLDING:
Galvanizing, roll-forming and/or blanking of steel
constitute further processing operations under subheading
9802.00.60, HTSUS. Accordingly, the steel in question will be
entitled to the partial duty exemption available under that
tariff provision when returned to the United States, upon
compliance with the documentation requirements of 19 CFR 10.9.
Sincerely,
John Durant, Director
Commercial Rulings Division